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Virgin Mobile - Case Study
Virgin Mobile - Case Study
STUDY
-Priyank Sinha
-Purnendu
-Rachna Saini
-Rahul Jain
-Rahul Raj
CORE COMPETENCY
Making a difference in the eyes of the customer in
terms of :
Value for Money
Quality
Innovation
Fun
A sense of ‘Cool-ness’
SEGMENTATION
Identified the age segment where the Industry penetration was
the lowest, that is, between 15 years to 29 years of age.
50
40 Mobile Phone
30 penetration
20
10
0
Age 15-19 Age 20-29 Age 30-59
Identified the income segment with a low disposable income
and high aspiration for trendiness.
1 15
32
Upper Class
Upper Middle Class
Lower Middle Class
32 Working Class
Lower Class
VALUE PROPOSITION
Basic intent to appeal to the youth, market, generate
additional usage, and create loyalty
virginExtra – Integrate entertainment with basic telephony
Text Messaging, Online Real-Time Billing, Rescue Ring, Wake-Up
Call, Ring Tones, Fun Clips, The Hit List, Music Messenger,
Movies.
Packaging – colorful and vibrant, Hassle free sale
Availability – At places frequented by the youth
VALUE POSITIONING
Holistic marketing approach takes pricing decision based
on various factors – 3Cs and marketing environment.
Company – Pricing should conform to the company’s
marketing strategy and its target markets and brand
positioning.
Customer – Uniform and hassle free pricing which will
enhance Customer’s satisfaction.
Competition – A pricing strategy which will provide the
company a distinct competitive advantage
PRICING STRATEGY: POSSIBLE OPTIONS
Option 1: Clone the industry prices
Pros
Ease in implementation
Service and application differentiation
Cons
No pricing advantage wrt competitors
Will not work with Low income segment
Cons
Low margin and would need deep pocket
Option 3: A whole new plan
Pros
Do away with the contracts so as to get Low Credit customers
Prepaid services to help customers decide their own talk plans
Cons
High churn rate of 6%
Concerns over margins
will increase in
corresponding increase D
in quantity of demand
Q1 Q2 Quantity
PRICING
Assumptions
Churn Rate= 6% for Prepaid
Rate of Interest (i)= 5% per annum
Market price = $ 0.15 for 200 minutes per month
A customer uses the service for one year as Expected number
of months a customer will stay with Virgin is 1/ Churn rate =
1/ 0.06 = 16.67 months
Churn rate remains constant for the period
a= 1
VirginXtras is not added to revenue
CALCULATING LTV
Average revenue per user per month by market rate = $ 30
Average revenue per user per year by market rate (ARPU)= $ 360
Value Positioning
Thank
You !!!